| A system dynamics model of household saving in Thailand was proposed. Thai household saving data from 1967-1990 was decomposed into six types of saving, or mental accounts. The study focused on four mental accounts: (1) pension and life insurance, (2) physical assets, (3) capital instruments, and (4) saving and time deposits. Through the analysis of the behavior patterns of each account, analysis of the feedback loops that relate various economic variables, and the use of survey information obtained regarding Thai household saving, a dynamic hypothesis was developed to explain the Thai household saving decision. A portfolio approach to saving was employed. Accessibility, liquidity, credit incentive, risk, rate of return, capital gain, and wealth accumulation were suggested as the main factors in the household saving decision. A model consisting of a system of equations was formulated based on the dynamic hypothesis. A spreadsheet was designed to produce model generated data. Model validity was evaluated by comparing the model's behavior patterns and structure to the actual system's behavior patterns and structure. Pattern validity is quantitatively proved, structural validity is not determined quantitatively. Policy measures meant to create an allocation of household saving that would be better suited for capital investment are described within the context of the proposed model. Finally, areas of possible model improvement and further research are discussed. |
